US stocks jumped as American president Donald Trump promised he would be “going big” with plans to blunt the economic pain caused by the coronavirus outbreak.

Markets around the world remain highly volatile as traders see a recession growing more likely – if it has not already begun.

Tuesday’s 3.9% gain for the S&P 500 meant it clawed back less than a third of its loss from a day before – its biggest dive in more than three decades.

Mr Trump wants the US government to send cheques to Americans in the next two weeks to help support them, while chunks of the economy come closer to shutting down, treasury secretary Steven Mnuchin said.

Gains for stocks accelerated temporarily as Mr Trump and Mr Mnuchin spoke at a White House briefing, but neither gave details about how big the stimulus could be.

Mr Mnuchin is pitching senate Republicans on a roughly 850 billion dollar (£691 billion) stimulus plan to help the economy, including relief for small businesses and the airline industry.

Investors have been waiting for Washington to offer more aid for the economy.

After flipping between gains and losses on Tuesday morning, stocks turned decisively higher after the US Federal Reserve revived a program first used in the 2008 financial crisis to help companies get access to cash for very short-term needs.

This is the latest in a string of big, emergency moves by the Fed and other central banks around the world to support the economy and smooth operations in markets.

The US stock market plunged to its worst day in more than three decades on Monday

No-one expects such moves to fix the health crisis, but investors hope they can help blunt the economic blow.

Barry Bannister, head of institutional equity strategy at Stifel, said: “Government tends to show up late to the party with a bazooka.

“It’s a bit of an overreaction, but that’s to be understood as normal for policymakers.”

Ultimately, investors say they need to see the number of infections slow before markets can find a bottom.

Worldwide cases now exceed 185,000. In the San Francisco area, nearly seven million people were all but confined to their homes in the nation’s most sweeping lockdown.

Trading was unsettled around the world. European stocks swung from gains to losses and back to gains.

South Korean stocks fell to their fifth straight loss of 2.5%, but Japanese stocks shook off an early loss to edge higher.

The Dow Jones Industrial Average see-sawed through the day. It went from up 600 points to down 300 to up 1,190 and then pulled back again.

It was up 531 points, or 2.6%, in early afternoon trading. A day earlier, it lost nearly 3,000 after Mr Trump said a recession may be on the way.

The S&P 500 is still roughly 26% below its record set last month and is close to where it was in late 2018, erasing most of the best year for stocks in decades.

Stocks have had a few rebounds since the market began selling off in mid-February on worries that Covid-19 will slam the economy and corporate profits.

All have ended up short-lived.

The S&P 500 has had four days in the last few weeks where it surged more than 4%, a remarkably large amount in normal times, and has slumped more than 2.8% the following day each time.

The virus has spread so quickly that its effects haven’t shown up in much US economic data yet.

A report on Monday about manufacturing in New York State was the first piece of evidence that manufacturing is contracting due to the outbreak. On Tuesday, a report showed that retail sales weakened in February, when economists had been expecting a gain.

“The global recession is here and now,” S&P Global economists wrote in a report Tuesday.

They say initial data from China suggests its economy was hit harder than expected, though it has begun to stabilise.

“Europe and the US are following a similar path,” the economists wrote.